SOLUTION MANUAL FOR
v v v
Principles Of Corporate Finance
v v v v
14th Edition By Richard Brealey, Stewart Myers, ALL
v v v v v v v
Chapters (1 - 34)
v v v v
, TABLE OF CONTENTS
V V
Chapter v1: vIntroduction vto vCorporate vFinance
Chapter v2: vHow vto vCalculate vPresent vValues
Chapter v3: vValuing vBonds
Chapter v4: vValuing vStocks
Chapter v5: vNet vPresent vValue vand vOther vInvestment vCriteria
Chapter v6: vMaking vInvestment vDecisions vwith vthe vNet vPresent vValue vRule v
Chapter v7: vIntroduction vto vRisk, vDiversification, vand vPortfolio vSelection
Chapter v8: vThe vCapital vAsset vPricing vModel
Chapter v9: vRisk vand vthe vCost vof vCapital
Chapter v10: vProject vAnalysis
Chapter v11: vHow vto vEnsure vThat vProjects vTruly vHave vPositiveNPVs v
Chapter v12: vEfficient vMarkets vand vBehavioral vFinance
Chapter v13: vAn vOverview vof vCorporate vFinancing
Chapter v14: vHow vCorporations vIssue vSecurities v
Chapter v15: vPayout vPolicy
Chapter v16: vDoes vDebt vPolicy vMatter?
Chapter v17: vHow vMuch vShould va vCorporation vBorrow?
Chapter v18: vFinancing vand vValuation v
Chapter v19: vAgency vProblems vand vCorporate vGovernance
Chapter v20: vStakeholder vCapitalism vand vResponsible vBusiness v
Chapter v21: vUnderstanding vOptions
Chapter v22: vValuing vOptions
Chapter v23: vReal vOptions v
Chapter v24: vCredit vRisk vand vthe vValue vof vCorporate vDebt
Chapter v25: vThe vMany vDifferent vKinds vof vDebt
Chapter v26: vLeasing
Chapter v27: vManaging vRisk
Chapter v28: vInternational vFinancial vManagement v
Chapter v29: vFinancial vAnalysis
Chapter v30: vFinancial vPlanning
Chapter v31: vWorking vCapital vManagement
Chapter v32: vMergers
Chapter v33: vCorporate vRestructuring v
,Chapter v34: vConclusion: vWhat vWe vDo vand vDo vNot vKnow vabout vFinance
CHAPTER v1
Introduction vto vCorporate vFinance
The vvalues vshown vin vthe vsolutions vmay vbe vrounded vfor vdisplay vpurposes. vHowever, vthe vanswers
vwerevderived vusing va vspreadsheet vwithout vany vintermediate vrounding.
Answers vto vProblem vSets
1. a. real
b. executive vairplanes
c. brand vnames
d. financial
e. bonds
*f. investment vor vcapital vexpenditure
*g. capital vbudgeting vor vinvestment
h. financing
*Note vthat vf vand vg vare vinterchangeable vin vthe vquestion.
Est vtime: v01-05
2. A vtrademark, va vfactory, vundeveloped vland, vand vyour vwork vforce v(c, vd, ve, vand vg) vare vall vreal
vassets. vReal vassets vare videntifiable vas vitems vwith vintrinsic vvalue. vThe vothers vin vthe vlist vare
vfinancial vassets,v
that vis, vthese vassets vderive vvalue vbecause vof va vcontractual vclaim.
Est vtime: v01-05
3. a. Financial vassets, vsuch vas vstocks vor vbank vloans, vare vclaims vheld vby vinvestors.
vCorporations vsell vfinancial vassets vto vraise vthe vcash vto vinvest vin vreal vassets vsuch vas
vplantv
and vequipment. vSome vreal vassets vare vintangible.
b. Capital vexpenditure vmeans vinvestment vin vreal vassets. vFinancing vmeans vraising vthe
v cashv
for vthis vinvestment.
, c. The vshares vof vpublic vcorporations vare vtraded von vstock vexchanges vand vcan vbe
vpurchasedv by va vwide vrange vof vinvestors. vThe vshares vof vclosely vheld vcorporations vare
vnot v publicly vtraded vand vare v held vby va vsmall vgroup vof vprivate vinvestors.
d. Unlimited vliability: vInvestors vare vresponsible vfor vall vthe vfirm‘s vdebts. vA vsole vproprietor
vhasvunlimited vliability. vInvestors vin vcorporations vhave vlimited vliability. vThey vcan vlose
vtheir vinvestment, vbut vno vmore.
Est vtime: v01-05
v v v
Principles Of Corporate Finance
v v v v
14th Edition By Richard Brealey, Stewart Myers, ALL
v v v v v v v
Chapters (1 - 34)
v v v v
, TABLE OF CONTENTS
V V
Chapter v1: vIntroduction vto vCorporate vFinance
Chapter v2: vHow vto vCalculate vPresent vValues
Chapter v3: vValuing vBonds
Chapter v4: vValuing vStocks
Chapter v5: vNet vPresent vValue vand vOther vInvestment vCriteria
Chapter v6: vMaking vInvestment vDecisions vwith vthe vNet vPresent vValue vRule v
Chapter v7: vIntroduction vto vRisk, vDiversification, vand vPortfolio vSelection
Chapter v8: vThe vCapital vAsset vPricing vModel
Chapter v9: vRisk vand vthe vCost vof vCapital
Chapter v10: vProject vAnalysis
Chapter v11: vHow vto vEnsure vThat vProjects vTruly vHave vPositiveNPVs v
Chapter v12: vEfficient vMarkets vand vBehavioral vFinance
Chapter v13: vAn vOverview vof vCorporate vFinancing
Chapter v14: vHow vCorporations vIssue vSecurities v
Chapter v15: vPayout vPolicy
Chapter v16: vDoes vDebt vPolicy vMatter?
Chapter v17: vHow vMuch vShould va vCorporation vBorrow?
Chapter v18: vFinancing vand vValuation v
Chapter v19: vAgency vProblems vand vCorporate vGovernance
Chapter v20: vStakeholder vCapitalism vand vResponsible vBusiness v
Chapter v21: vUnderstanding vOptions
Chapter v22: vValuing vOptions
Chapter v23: vReal vOptions v
Chapter v24: vCredit vRisk vand vthe vValue vof vCorporate vDebt
Chapter v25: vThe vMany vDifferent vKinds vof vDebt
Chapter v26: vLeasing
Chapter v27: vManaging vRisk
Chapter v28: vInternational vFinancial vManagement v
Chapter v29: vFinancial vAnalysis
Chapter v30: vFinancial vPlanning
Chapter v31: vWorking vCapital vManagement
Chapter v32: vMergers
Chapter v33: vCorporate vRestructuring v
,Chapter v34: vConclusion: vWhat vWe vDo vand vDo vNot vKnow vabout vFinance
CHAPTER v1
Introduction vto vCorporate vFinance
The vvalues vshown vin vthe vsolutions vmay vbe vrounded vfor vdisplay vpurposes. vHowever, vthe vanswers
vwerevderived vusing va vspreadsheet vwithout vany vintermediate vrounding.
Answers vto vProblem vSets
1. a. real
b. executive vairplanes
c. brand vnames
d. financial
e. bonds
*f. investment vor vcapital vexpenditure
*g. capital vbudgeting vor vinvestment
h. financing
*Note vthat vf vand vg vare vinterchangeable vin vthe vquestion.
Est vtime: v01-05
2. A vtrademark, va vfactory, vundeveloped vland, vand vyour vwork vforce v(c, vd, ve, vand vg) vare vall vreal
vassets. vReal vassets vare videntifiable vas vitems vwith vintrinsic vvalue. vThe vothers vin vthe vlist vare
vfinancial vassets,v
that vis, vthese vassets vderive vvalue vbecause vof va vcontractual vclaim.
Est vtime: v01-05
3. a. Financial vassets, vsuch vas vstocks vor vbank vloans, vare vclaims vheld vby vinvestors.
vCorporations vsell vfinancial vassets vto vraise vthe vcash vto vinvest vin vreal vassets vsuch vas
vplantv
and vequipment. vSome vreal vassets vare vintangible.
b. Capital vexpenditure vmeans vinvestment vin vreal vassets. vFinancing vmeans vraising vthe
v cashv
for vthis vinvestment.
, c. The vshares vof vpublic vcorporations vare vtraded von vstock vexchanges vand vcan vbe
vpurchasedv by va vwide vrange vof vinvestors. vThe vshares vof vclosely vheld vcorporations vare
vnot v publicly vtraded vand vare v held vby va vsmall vgroup vof vprivate vinvestors.
d. Unlimited vliability: vInvestors vare vresponsible vfor vall vthe vfirm‘s vdebts. vA vsole vproprietor
vhasvunlimited vliability. vInvestors vin vcorporations vhave vlimited vliability. vThey vcan vlose
vtheir vinvestment, vbut vno vmore.
Est vtime: v01-05
